Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Chorus gets reprieve as Adams puts price controls on hold

Chorus gets reprieve as government puts price regulation on hold pending review

By Paul McBeth

Feb. 8 (BusinessDesk) - Telecommunications network operator Chorus has been given some breathing space over price regulation of its ageing copper lines after Communications Minister Amy Adams put the regulator’s plans on hold pending a wider review of rules governing the sector.

The Commerce Commission won't be able to implement cost-based prices on unbundled bitstream access services on Chorus' copper lines until Nov. 30, 2015, while the government embarks on its review and makes any changes, Adams said in a statement. The decision comes after Telecommunications Commissioner Stephen Gale surprised the Beehive when flagging plans to impose a monthly regulated price of $32.45 for UBA, down from $44.98 at present.

What rankled policymakers was that the draft determination seemed to undermine the government's stated aim of rolling out a nationwide fibre broadband network through subsidising Chorus and other partner companies, by making cheaper services on legacy copper more attractive to end consumers.

"Increased certainty around the transition path from copper to fibre will promote development of retail fibre products, boosting the ability of New Zealand homes, businesses, schools and hospitals to maximise the transformative potential of these technologies," Adams said. "One common message I have continually heard from consumers and industry is that they want certainty."

Chorus estimated the decision could shave 40 percent from its annual earnings, and the stock plunged after the announcement last year. The shares were unchanged at $2.86 yesterday.

"From an investor's perspective it's a good outcome," said Shane Solly, portfolio manager at Mint Asset Management. "It's appropriate to take some time to review policy implementation, to slow down and take a holistic approach."

Adams has ordered a review of the Telecommunications Services Obligation and a wider review of the policy framework regulating telecommunications services.

The reviews will focus on long-term interests of consumers, while taking into account market structure, technology developments, competition and network investment, she said. Any legislative changes will be ushered through by the end of this year.

The announcement comes after submissions on the regulator's draft report showed a divide between those investing in the network, including Chorus, and those purchasing services from the company and group's representing end-consumers.

The Telecommunications Users Association said in its submission this week that it was "gravely concerned" over the potential for political interference after the commission had followed the law as it's written, fearing it could undermine the regulator's good work.

The lobby group said Chorus shouldn't have been surprised by the draft decision, with the industry discussing the law at some length in the lead-up.

Wholesale prices for access to the copper lines were averaged as a result of legislation enabling Telecom to carve out its Chorus unit last year, something that annoyed rival telecommunications companies who said it would lift their costs.

At the time of the enabling legislation, Ministry of Economic Development officials downplayed concerns about the impact on copper-line prices, saying it wasn't "deemed significant" and that any increase in UCLL pricing may "have the positive impact of encouraging more investment and innovation on fibre."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news